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North American Bond Research – July 30, 2020

Posted on July 30, 2020
HIGH YIELD BOND RESEARCH
July 30, 2020
Bond Markets

US AND GERMANY GDP CONTRACTED 32.9% AND 34.3% RESPECTIVELY, WHICH SENT GLOBAL MARKETS LOWER. OVER 1.4 MILLION MORE AMERICANS FILED FOR UNEMPLOYMENT. TOUGH WEEK FOR EARNINGS. 10 Year Treasury notes were down 2.1 bps. S&P -0.38%, Dow -0.85%, NASDAQ +0.43%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 17.35 MILLION+ CASES AND 674000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.6 MILLION+ CASES AND 154000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Hertz Corp (The) (USD) 7% 1/15/2028 made analysts’ ‘Conviction Buy’ list. (See the chart below for Hertz Corp  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   AT&T Inc. 2.25% 2/1/2032 +0.1%
  AT&T Inc. 3.1% 2/1/2043 +0.0%
  AT&T Inc. 1.65% 2/1/2028 +1.8%
  Bank of America Corp. VAR% 6/19/2041 +1.0%
  AT&T Inc. 2.3% 6/1/2027 +0.2%
–   Boeing Co. 5.805% 5/1/2050 -0.6%
  AT&T Inc. 3.3% 2/1/2052 -0.0%
  Boeing Co. 5.93% 5/1/2060 -0.8%
  AT&T Inc. 5.3% 8/15/2058 -0.2%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 -0.1%
AT&T Inc.   2.25% 2/1/2032
AT&T Inc.   3.1% 2/1/2043
Boeing Co.   5.805% 5/1/2050
AT&T Inc.   1.65% 2/1/2028
Bank of America Corp.   VAR% 6/19/2041
AT&T Inc.   2.3% 6/1/2027
AT&T Inc.   3.5% 2/1/2061
Shell Intl. Finance BV   1.75% 9/12/2021
Goldman Sachs Group Inc.   3.8% 3/15/2030
AT&T Inc.   3.3% 2/1/2052
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.18% 0.71% 3.62% 7.26% 4.48% 8.81%
Mining 0.28% 0.77% 4.13% 28.62% -12.23% -8.28%
Construction 0.04% 0.70% 2.89% 10.37% 2.59% 6.99%
Manufacturing 0.08% 0.56% 3.78% 10.38% 1.06% 6.24%
Transportion, Communication, Electric/Gas 0.02% 0.30% 2.97% 8.45% 3.20% 6.78%
Wholesale 0.06% 0.67% 2.57% 11.59% 0.80% 4.44%
Retail 0.06% 0.53% 3.75% 10.01% -0.50% 3.55%
Finance, Insurance, Real-Estate 0.06% 0.49% 3.05% 9.63% 0.78% 4.94%
Services 0.06% 0.37% 3.38% 8.68% 0.76% 5.60%
Public Administration 0.12% 0.52% 2.25% 10.04% 3.42% 7.85%
Energy 0.24% 0.77% 4.33% 27.94% -10.85% -6.65%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Univest Corp. of Pennsylvania (USD) VAR% 8/15/2030 (07/29/2020): 100MM Subordinated Notes, Price at Issuance 100.

2. Alexandria Real Estate Equities Inc. (USD) 1.875% 2/1/2033 (07/29/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.812, Yielding 1.89%.

Additional Commentary

NEW ISSUANCE WATCH: Alexandria Real Estate Equities Inc. issued $1000MM in notes.
Top Widening Loans Top Narrowing Loans
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Albertsons LLC (USD) TL L+275 11/17/2025
Brightview Landscapes LLC (USD) TL L+250 08/10/2025
API Technologies Corp. (USD) TL L+425 05/09/2026
CPA Global (EUR) TLB E+325 11/01/2024
ConvergeOne LLC (USD) TL L+500 01/04/2026
Ball Corp. (USD) TLA L+150 03/21/2024
Verifone Inc. (USD) TL L+400 08/20/2025
Tacala LLC (USD) TLB L+350 02/05/2027
Broadcom LTD (USD) TLA7 05/07/2026

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

  • Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

OVERALL CREDIT MARKET:

Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces.  Positive effects remained in force:

  • TED spread held below 16 bp (basis points), as of 07/30/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
July 30, 2020
Bond Markets

US AND GERMANY GDP CONTRACTED 32.9% AND 34.3% RESPECTIVELY, WHICH SENT GLOBAL MARKETS LOWER. OVER 1.4 MILLION MORE AMERICANS FILED FOR UNEMPLOYMENT. TOUGH WEEK FOR EARNINGS. 10 Year Treasury notes were down 2.1 bps. S&P -0.38%, Dow -0.85%, NASDAQ +0.43%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 17.35 MILLION+ CASES AND 674000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.6 MILLION+ CASES AND 154000+ DEATHS. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Halliburton Co. (USD) 5% 11/15/2045 made analysts’ ‘Conviction Buy’ list. (See the chart below for Halliburton Co.  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   AT&T Inc. 2.25% 2/1/2032 +0.8%
  AT&T Inc. 3.1% 2/1/2043 +0.7%
  AT&T Inc. 1.65% 2/1/2028 +0.6%
  Bank of America Corp. VAR% 6/19/2041 +0.9%
  AT&T Inc. 2.3% 6/1/2027 +0.2%
–   Boeing Co. 5.805% 5/1/2050 -0.6%
  Shell Intl. Finance BV 1.75% 9/12/2021 -0.2%
  Boeing Co. 5.93% 5/1/2060 -0.6%
  Enterprise Products Operating LLC 2.8% 1/31/2030 -0.1%
  Boeing Co. 5.15% 5/1/2030 -0.7%
AT&T Inc.   2.25% 2/1/2032
AT&T Inc.   3.1% 2/1/2043
Boeing Co.   5.805% 5/1/2050
AT&T Inc.   1.65% 2/1/2028
Bank of America Corp.   VAR% 6/19/2041
AT&T Inc.   2.3% 6/1/2027
AT&T Inc.   3.5% 2/1/2061
AT&T Inc.   3.3% 2/1/2052
Shell Intl. Finance BV   1.75% 9/12/2021
Goldman Sachs Group Inc.   3.8% 3/15/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.04% 0.38% 3.81% 12.68% 6.10% 9.75%
Construction 0.07% 0.45% 2.48% 6.85% 5.56% 8.35%
Manufacturing -0.02% 0.18% 2.61% 5.75% 8.06% 11.86%
Transportion, Communication, Electric/Gas -0.03% 0.29% 3.58% 6.90% 9.90% 14.42%
Wholesale 0.08% 0.31% 2.25% 6.83% 6.49% 11.53%
Retail -0.05% 0.03% 2.63% 5.66% 9.30% 14.26%
Finance, Insurance, Real-Estate 0.01% 0.20% 1.68% 4.89% 6.13% 9.43%
Services -0.04% 0.14% 2.50% 5.40% 7.34% 11.20%
Public Administration 0.03% 0.20% 0.52% 0.73% 4.72% 5.46%
Energy -0.03% 0.31% 3.30% 12.42% 5.09% 9.09%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Univest Corp. of Pennsylvania (USD) VAR% 8/15/2030 (07/29/2020): 100MM Subordinated Notes, Price at Issuance 100.

2. Alexandria Real Estate Equities Inc. (USD) 1.875% 2/1/2033 (07/29/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.812, Yielding 1.89%.

3. Reliance LP (CAD) 2.68% 12/1/2027 (07/29/2020): 430MM Secured Notes, Price at Issuance 99.982, Yielding 2.68%.

4. Highwoods Realty LP (USD) 2.6% 2/1/2031 (07/30/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.591, Yielding 2.64%.

5. Enterprise Products Operating LLC (USD) 3.2% 2/15/2052 (07/30/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.233, Yielding 3.24%.

6. Truist Financial Corp. (USD) 1.125% 8/3/2027 (07/30/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.839, Yielding 1.15%.

Additional Commentary

NEW ISSUANCE WATCH: on 07/30/2020 participants welcome a $1000MM new corporate-bond offering by
Enterprise Products Operating LLC.
Top Widening Loans Top Narrowing Loans
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Albertsons LLC (USD) TL L+275 11/17/2025
Brightview Landscapes LLC (USD) TL L+250 08/10/2025
API Technologies Corp. (USD) TL L+425 05/09/2026
CPA Global (EUR) TLB E+325 11/01/2024
ConvergeOne LLC (USD) TL L+500 01/04/2026
Ball Corp. (USD) TLA L+150 03/21/2024
Verifone Inc. (USD) TL L+400 08/20/2025
Tacala LLC (USD) TLB L+350 02/05/2027
Broadcom LTD (USD) TLA7 05/07/2026

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

  • Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

OVERALL CREDIT MARKET:

Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces.  Positive effects remained in force:

  • TED spread held below 16 bp (basis points), as of 07/30/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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